Saturday

1st Oct 2016

Eurozone ministers impatient on Greek bailout review

Greece came under renewed pressure to reach a deal with creditors on the latest round of cuts and economic reforms at a meeting of eurozone finance ministers in Brussels on Monday (28 January).

Troika officials representing Greece's creditors began their latest review of the implementation of the country's €240 billion rescue in September.

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But they are still to approve the next tranche of a rescue loan, with offficials indicating that an agreement was unlikely to be reached before the end of February.

The review “is taking too long,” Jeroen Dijsselbloem, the Dutch finance minister and chairman of the “Eurogroup,” said. “It’s been going on since September-October, and I think it’s in the joint interest of us and the Greek government to finalise it as soon as possible.”

Dijsselbloem also told reporters that any further discussions aimed at tackling an estimated €11 billion shortfall in Greece's finances in 2014 are on hold.

“We’ve made it quite clear that we’re not going to come back to it until there is a final positive conclusion to the review,” he noted.

"We call on Greece and the troika to do the utmost to conclude the negotiations," he added.

The Greek government is not facing an imminent cash-flow crisis, but says it has no political room to implement any more spending cuts.

The Greek government says its economy will emerge from six years of recession in 2014, and record a primary budget surplus of 1.6 percent of GDP in the process.

It also says that a primary surplus should see its creditors reduce the country's debt burden as part of the bailout agreement.

For his part, Greek finance minister Yannis Stournaras said he hoped a deal could be reached next month, paving the way for the release of more financial aid in March. He also suggested that Greece would record a primary surplus for 2013, estimated at €830 million.

Stournaras noted that any fiscal gap for 2015 would be covered with structural reforms, not further austerity measures.

Ministers also discussed the conclusion of Portugal's rescue package, as well as the implications of the wind-down of the US economic stimulus.

The gradual reduction in the US Federal Reserve's multi-billion dollar monthly bond buying programme could lead to a bumpy ride for the global financial system, with emerging countries likely to be the worst affected.

"Of course we are worried about this from the perspective of the emerging countries," Dijsselbloem told reporters. He added: "I am not particularly worried about the risk of contagion. I think the position of the eurozone is different and that we have to maintain our progress."

Analysis

Renzi's EU attacks are survival strategy

Faced with a difficult referendum campaign, the Italian prime minister is playing the antiestablishment card, including verbal attacks on the EU and Germany.

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